May update – a pick up in primary opportunities in the month as companies look to raise money for expansion

6th June 2019

We participated in six primary opportunities in May in what was a busy month for opportunities – Brewin Dolphin, Sirius Minerals, Marlowe and Tritax Eurobox all raised fresh capital. Essensys was bought at IPO and we added to our holding in Hargreaves Lansdown as part of a secondary selldown.

In May, the MFM UK Primary Opportunities Fund returned -2.14% compared with -3.00% for the FTSE All Share and -3.10% for the IA UK All Companies Sector.

Markets fell from eight month highs on an escalation in trade tensions between the US and China, which data shows is already starting to affect global trade which will in turn have negative repercussions for global GDP. Sterling hit four month lows as the domestic political situation became less clear still. Prime Minister May announced that she will stand down on June 7. A leadership contest with more than ten candidates vying for the top position awaits. Having seemingly stepped back from a hard Brexit, the potential for the outcome the market most fears has risen, particularly if the next Prime Minister is a Brexit hardliner. Whilst not our base case, we remain cautious to companies that are heavily exposed to cyclical parts of the UK economy.

The first quarter of the year saw fewer primary opportunities than might have been expected given market strength. For many companies they deemed it best to wait until the UK’s position was finalised with the EU. However, as the can has been kicked down the road, we are seeing companies tired of waiting raise money to drive their businesses forward. We anticipate a busy few months which should provide us with attractive opportunities to buy into good quality companies in a market where valuations, on the whole, appear modest.

Please be advised that the past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested



Brewin Dolphin

Brewin Dolphin is a wealth manager and a constituent of the FTSE 250. Having recently acquired a business in Ireland from Investec, it raised £60m to maintain its strong regulatory capital base. We acquired the shares at a 5% discount to the previous night’s closing share price. The shares are modestly valued with an attractive dividend yield of over 4%.

Sirius Minerals

Sirius is the developer of a polyhalite mine in Yorkshire which aims to extract large quantities of the substance from the ground to be used in specialist fertilisers which are more cost effective to farmers than current fertilisers. We acquired the shares as part of a deeply discounted £300m share issue (32% discount) to fund the next stage of the development. $500m of bonds are also to be issued. Whilst not without risk, we believe this to be an attractive entry point for an exciting company and the fund raise significantly de-risks the project.


We added to our holding in this fire and water safety testing business. We acquired the shares as part of a fund raise for a further acquisition in its water safety business. A very acquisitive company, we do not expect this to be the last fund raise.

Hargreaves Lansdown

We added to our holding in this Bristol based FTSE 100 financial services company. As has become customary around this time of year, founder Steve Lansdown sold 1.5% of the Company at a 5% discount. A genuine market leader in the business to consumer financial services industry.

Tritax Eurobox

We added to our holding following a €135m raise to fund the purchase of further industrial warehouse sites in Europe. The shares offer an attractive 4.75% dividend yield and offer a useful diversifier to our UK property exposure.


Essensys is a leading software provider to the fast growing flexible workspace industry. With typically a high turnover of clients, one of the challenges of a flexible workspace is to manage the IT, compliance and billing of the tenants. We acquired the shares at IPO where the company has raised £28m for further expansion. The shares have enjoyed a strong start appreciating 15%.

J Sainsbury

The UK’s second largest supermarket and owner of Argos. With the Competition & Markets Authority blocking the proposed merger with Asda, the shares have fallen sharply. Trading 20% below the level before the deal was announced, we consider the falls overdone and so purchased a modest position, which we may look to add to further, in the secondary market. With the shares on a PE of 10 and yielding over 5%, we see value in this UK domestic retailer.




We used the recent share price strength following a good trading update to take profits in this internet domain name seller focused on emerging markets. Whilst the valuation is not demanding, we were content to take advantage of liquidity to recycle the money raised into new primary opportunities.

Urban & Civic

We used recent strength following positive development news flow and inclusion in an MSCI index, to sell our holding. The shares have held up well in difficult market conditions over the past nine months and we were happy to take our modest profits.


Cumulative Performance (Total Return %)– May 2019

Fund/Benchmark Name Year to 31/05/2019 3 Years to 31/05/2019
5 years to 31/05/2019
Since Inception (28/05/1997)
MFM UK Primary Opportunities P Acc -1.83 33.50 44.24 390.90
Quartile Ranking – IA UK All Cos 1 1 1 1
IA UK All Companies -4.66 23.61 28.57 252.26
FTSE All Share -3.17 28.44 29.33 265.44


Discrete Annual Performance (Total Return %)– May 2019

Fund/Benchmark Name 31/05/2018 to 31/05/2019 31/05/2017 to 31/05/2018 31/05/2016 to 31/05/2017 31/05/2015 to 31/05/2016 31/05/2014 to 31/05/2015
MFM UK Primary Opportunities P Acc -1.83 6.25 28.00 -0.27 8.33
Quartile Ranking – IA UK All Cos 2 2 1 1 3
IA UK All Companies -4.66 6.63 21.59 -5.72 10.32
FTSE All Share -3.17 6.53 24.52 -6.31 7.47

Source: FE 2019


The past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested. R.C. Brown and Marlborough are authorised and regulated by the FCA. Marlborough Fund Manager are the ACD. The Key Investor Information Document and the Full Prospectus can be obtained via or by request at: